Estrogens have a feminizing effect on gonadal differentiation in fish, amphibians, reptiles, and birds. However, the role of estrogen during gonadal differentiation in mammals is less clear. We investigated the effect of estrogen on gonadal differentiation of male tammar wallabies. Male pouch young were treated orally with estradiol benzoate or oil from the day of birth, before seminiferous cords develop, to Day 25 postpartum and were killed at Day 50 postpartum. In all estrogen-treated neonates, a decrease in gonadal volume, volume of the seminiferous cords, thickness of the tunica albuginea, and number of germ cells was found. The stage of treatment affected the magnitude of the response. Two of three male young born prematurely after 25 days of gestation and treated subsequently with estradiol had ovary-like gonads, with well-developed cortical and medullary regions and primordial follicle formation. Furthermore, at Day 50 postpartum, many (21%) of the germ cells in these sex-reversed ovaries were in the leptotene and zygotene stages of meiosis, similar to female germ cells at the same stage of development. In the other males born on Day 26 of gestation or later, estradiol treatment from the day of birth caused development of dysgenetic testes, with abnormal Sertoli cells, atrophy of the seminiferous tubules and tunica albuginea, and absence of meiotic germ cells. In this marsupial, therefore, estradiol can induce either partial or complete transformation of the male gonads into an ovary with meiotic germ cells. These results confirm that estrogen can inhibit early testicular development, and that testis determination occurs during a narrow window of time.